Reservation fee for new build apartment?

by Readers Question

6:21 AM, 9th June 2016
About 2 years ago

Reservation fee for new build apartment?

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Reservation fee for new build apartment?

I reserved an apartment in a new build block off-plan. I signed a reservation form and paid a fee of £2000. Having subsequently researched the quoted expected rental income (and finding it to be very much inflated) and realising that the estimated service charge was unrealistic, I decided not to proceed with the purchase.consumer protection

Eleven days after the reservation, I wrote to the developer stating that I had decided not to purchase and requesting the return of the £2000 fee, which he has refused to do. He contends that I was told verbally that the fee was non-returnable, a contention that I deny, but more importantly the reservation form does not state that it is non-returnable and nowhere on any of the printed material does this term appear.

Am I correct in believing that this contravenes my consumer rights and, if so, how should I proceed?

Gay



Comments

Neil Patterson

6:29 AM, 9th June 2016
About 2 years ago

Hi Gay,

The consumer protection act would I suppose have to look at this in relation to the contract.
Other readers may have experience of this scenario and or you may need help from our friends at Cotswold Barristers. Please see member profiile of Mark Smith (Barrister-At-Law) >> http://www.property118.com/member/?id=1945

LondonProperty1 L

7:32 AM, 9th June 2016
About 2 years ago

Not being an expert and just an outside, logical observer I would say that you have a right to receive back £2,000 only if the developer had the right to sell the plot to other buyer after you left the deposit. This way you can prove that the £2,000 did not offer a true reservation and your money should be refunded when you decide to pull out.

In other circumstances (when the deposit gives you absolute right to purchase the plot) the developer would have absolutely no interest in collecting a tiny payment, which they need to return to the potential buyer at their whim any time before providing the full deposit.

So I suggest you read what you are actually buying for that £2,000 - legally for a contract to be binding there has to be consideration exchanged from both sides (money exchanged for a reservation in this case - but only if the reservation is binding in my view).

Gay Woodcock

7:34 AM, 9th June 2016
About 2 years ago

Thank you, Neil, but I did not sign a contract, only the very simple, one page Reservation Form, which did not state that the fee was non-returnable

Gay Woodcock

7:41 AM, 9th June 2016
About 2 years ago

Thank you, too, London_Property, but there is no literature to state what I was buying for the £2000. I am sure that the plot I was considering is now back on the market - it has not even been built yet.

Steven Burman

10:15 AM, 9th June 2016
About 2 years ago

Gay,

There is a simple & inexpensive way to test the developers resolve (as well as the legal position). Write to them requesting that they return your money within 14 days otherwise you will refer the matter to the courts.

If they don't return the money then you can start legal action against them using the governments Money Claim service (the equivalent of the old Small Claims Court). You can do this online at http://www.gov.uk (search for Money Claim). It costs at little as £35 and the court will issue papers on your behalf.

At the very least this will test the developers resolve. Are they really going to spend significant amounts of money on legal representation rather than return a comparatively small amount? There is only one way to find out.

SB

Romain Garcin

12:19 PM, 9th June 2016
About 2 years ago

If you already are a BTL landlord and you were looking at expanding your portfolio then, arguably, you are not a consumer.

I would agree with London_Property that your entitlement to a refund depends on what, if anything, you bought with that fee.

Ian Ringrose

16:15 PM, 9th June 2016
About 2 years ago

If you can show the developer mislead you, you have a good case based on advertising standards, the developer may not wish to risk a court case that will be reported in the local paper whatever the outcome is……


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